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A flurry of recent appellate court decisions have changed the landscape of worker protections under federal workplace discrimination laws. This has raised questions for employers who may look to religious protections to defend their hiring and firing decisions.

Title VII of the 1964 Civil Rights Act was designed to put an end to the “Mad Men” days of demeaning and discriminatory treatment on the basis of race, color, national origin, religion, and sex. Interpretations of the law’s protections against sex discrimination have expanded to cover more individuals within the LGBT community.

“The law is finally beginning to catch up with the people,” Gauri Punjabi, an employment attorney in Boston, told Bloomberg Law.

But what will the recent rulings from several federal appeals courts mean for the religious protections afforded to corporations under the Religious Freedom Restoration Act?

“The decisions might create new potential conflicts for religious organizations,” Luke Goodrich, attorney at the Becket Fund for Religious Liberty, told Bloomberg Law. “But RFRA is rarely used as a defense in Title VII cases.” Any concerns about a push by religious organizations against Title VII are overblown, he said.

A RFRA defense would only apply to an instance where the government or one of its agencies infringed on the religious protections afforded by the Act. As a federal law, Title VII provides protections when either a private actor or a state agency violates its inherent protections.

RFRA has been around since 1993. It perhaps saw its brightest day with the Hobby Lobby case in 2014, when the crafts store argued that being forced to implement the contraception component of the Affordable Care Act would violate its sincerely held religious beliefs. The U.S. Supreme Court agreed, setting a landmark precedent that not only ascribed religious belief to a closely held corporation, but constitutional protections that come with it.

Fast forward to 2018 where the Second and Seventh Circuit Courts of Appeal have said that Title VII anti-bias provisions cover sexual orientation, and both the Sixth Circuit and the federal agency charged with enforcing workplace anti-discrimination laws have broadened the act’s protections to include transgender identity. The myriad of rulings have led some to question if the apparent shift in judicial posture is a harbinger portending the end of the ‘religious exemption’ as a defense to the anti-discrimination protections of Title VII.

Encroachment on Religious Values?

Employee Aimee Stephens was fired from her job as a funeral director after telling her employer that she would begin transitioning from male to female. The Equal Employment Opportunity Commission brought suit on Stephens’ behalf, alleging that the funeral home’s termination on the basis of her transgender status was unlawful under Title VII. The funeral home responded that enforcing the EEOC policy would violate the funeral home’s sincerely held religious beliefs. The appeals court ruled in favor of Stephens, effectively holding that discrimination based on transgender status is prohibited under Title VII.

Some saw the ruling as an encroachment on the rights of businesses to make decisions in keeping with their values.

“American business owners should be free to live and work consistently with their faith,” Gary McCaleb, senior counsel with Alliance Defending Freedom, told Bloomberg Law in an email. The Alliance represented Harris Funeral Homes in the case.

“Harris Funeral Home’s dress code is tailored to serve those mourning the loss of a loved one. The decision misreads court precedents that have long protected businesses which properly differentiate between men and women in their dress and grooming policies,” McCaleb said. “Court opinions should interpret legal terms according to their plain meaning when Congress passed the law. This opinion instead re-writes federal law and is directly contrary to decisions from other federal appellate courts.”

McCaleb said his group is “consulting with our client to consider their options for appeal.”

Expanded Application

The Sixth Circuit was among the first federal courts to take an expanded view of sex discrimination under Title VII, with a pair of decisions going back more than a dozen years.

In 2005, the court in Smith v. City of Salem held that the 24-hour suspension of a transgender firefighter violated federal law in that it discriminated by gender stereotyping, and on the basis of transgender and transitioning status, which the court found was necessarily discrimination on the basis of sex.

One year later, the court ruled in the case of Barnes v. City of Cincinnati, in which a Cincinnati police officer who lived his on-duty life as a man and his off-duty time as a woman was demoted for a failure to conform to gender stereotypes. The Sixth Circuit found that this too violated Title VII.

The findings were unique in that courts had traditionally not viewed cases involving discrimination against transgender workers as falling under the protections of Title VII. The findings in Smith and Barnes established that transgender workers, and arguably all non-gender conforming workers, were protected under the law.

While the Sixth Circuit findings in Smith and Barnes served to expand Title VII protections, the Harris decision added an additional facet that RFRA was subordinate to the EEOC’s authority to enforce anti-discrimination laws under Title VII. Companies also can’t rely on the religious law to escape bias claims in lawsuits brought by employees themselves.

“RFRA isn’t a defense in private litigation,” Omar Gonzalez-Pagan of Lambda Legal told Bloomberg Law. “RFRA by its terms only applies to government action. If you decide to participate in the public marketplace you have to abide by the rules and protections that are in place.”

Issue Bound for Supreme Court?

Though advocates may argue that decisions in the Second, Sixth, and Seventh Circuits might be indicative of a trend, it’s in stark opposition to some of the legal positions coming out of the Executive Branch.

The Justice Department in July 2017 reversed its Obama-era position that Title VII prohibits sexual orientation discrimination, putting it at odds with the EEOC. The two agencies filed competing briefs in the Zarda sexual orientation bias case in the Second Circuit.

In October 2017 Attorney General Jeff Sessions drafted a memo to all federal prosecutors where he reversed another policy from the Obama administration that explicitly expanded Title VII protections to cover transgender workers. The memo was brief, stating primarily that Title VII “does not encompass discrimination based on gender identity per se, including transgender status.”

The DOJ’s reversal of the Obama era position “is a radical shift, taking the position that trans-based discrimination doesn’t violate Title VII,” said Davis. “Courts have been unequivocal on whether transgender bias constitutes sex discrimination under Title VII. Even conservative judges have agreed on this for about a decade.”

Currently, circuit courts are split over the application of Title VII to cases involving sexual orientation, with the Eleventh Circuit ruling in March 2017 that Title VII’s prohibitions on sex discrimination do not include bias based on sexual orientation.

When asked if he saw the matter being taken up by the highest court, Davis thinks it might happen as soon as next term, noting that the high court declined to hear the Eleventh Circuit case. “The Supreme Court can’t avoid these questions much longer. They kicked the can down the road, denying cert in Evans v. Georgia Regional Hospital. Divorcing sexual orientation from sex discrimination is an issue of national importance. I just don’t think they can avoid this much longer.”

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